Charts Of The Day
Chart Number One: Back on Track
This name -- Zoetis (ZTS - Get Report) -- that had been a strong performer throughout 2017 ran into trouble ahead of earnings...along with the rest of the broader US equity marketplace. I want you to look at this. See the orange Fibonacci Fan Lines? Not only have these shares rebounded precisely where they should have (38.2% re-tracement off trend), but they did it twice...in late October and early February. Wow. So, we have no doubt. We know where rising support lives, and so do the algos. That's important. Yesterday's rally, while not completely undoing the week prior's sell-off, certainly keeps the name on trend. Now look at how well this name obeys the Andrews' Pitchfork model.
My thought on this, are that Zoetis may or may not be a good investment. It looks like it may be. On top of that, if trend is to continue to be respected, and the Pitchfork obeyed...one might just get away with writing 82.50 March 16 calls and 72.50 March 16 puts against the position. This may knock a rough 75 cents off of your average point of entry. If the name runs significantly against you, you will have to buy more shares at 72.50, unless you buy back the put. Then again, you liked the stock above 78.
Chart Number Two: Death Spiral
I like Campbell's Soup (CPB - Get Report) . I always have. The soup that is, not the stock. It is easy however to root for this name, an American classic. As you can see, Campbell Soup spend most of 2017 in a death spiral until finally broadening out to form a bottom over the past half year. This allows us to apply a pitchfork to the chart.
If earnings surprise today, you can see from the applied blue Fibonacci levels that resistance likely lies in the area of 50.67. The shares have already drawn back from that spot precisely. Should the numbers disappoint, and the shares move lower today, then this "newish" Pitchfork model will be implemented for further pricing anticipation. Your daily MACD is starting to show some life. Money Flow, however remains awful. Today is a big day for this name, potentially a true pivot point if conditions are to improve, or further deteriorate. I am not touching this one until they show me. It's fine if I miss out.
(A longer version of this column appeared at 7:54 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Stephen "Sarge" Guilfoyle, Jim Cramer and other experts throughout the market day.)